Solar conflict isn’t just PUC’s fault

By Michael Henderson, Las Vegas

Friday, Jan. 29, 2016 | 2 a.m.

In the letter to the editor “PUC doesn’t act in public’s benefit” (Las Vegas Sun, Jan. 16), the writer repeats the oft-misunderstood idea that the Public Utilities Commission of Nevada’s prime objective should be as a protector of consumer rights. That would be the role of the Bureau of Consumer Protection in Carson City. The real objective of the PUC is to balance the needs of the company and its customers in a way that mutual rights, obligations and benefits are preserved to the extent possible.

The true nature of the conflict around the change in rooftop solar reimbursement practices by NV Energy is rooted in the relationships between regulatory commissions and public utilities. Public utilities agree to give up certain rights in exchange for a franchise to be an exclusive provider, or a monopoly, in an area. One of the rights surrendered is the right to unilaterally set prices. State commissions set utility rates high enough to allow private utilities to recover operating expenses related to service provision, earn a reasonable rate of return on their capital investments and pay taxes on their earnings. In setting utility rates, regulatory commissions use the End Result Doctrine to avoid piecemeal or single-issue rate making. This doctrine uses the total net cost of operations as the basis for setting rates.Failing to follow this principle has led to the conflict between NV Energy and its net-metering customers. The PUC, however, did not act alone in this decision.

In its 2015 session, the Nevada Legislature passed SB 374, which authorized the PUC to establish new rate classes, rates, terms and conditions, and terminate existing tariffs for rooftop solar customers.The PUC is simply doing what the Legislature directed them to do. It is not the regulators who have gotten too close to the industry they regulate; it is the Legislature and the governor who signed it into law.

If the Legislature created this mess, the Legislature can fix it. This is a good time to examine the role our Senate and Assembly representatives played in passing SB 374. This is an election year, and we will have the opportunity to query candidates as to their willingness to support legislation that would remedy this unfair condition. We should take advantage of that opportunity every time we can.